FED SURVEY

January 31, 2017
These survey results represent the opinions of 41 of the nation’s top money managers,
investment strategists, and professional economists.

FED SURVEY

They responded to CNBC’s invitation to participate in our online survey. Their responses were
collected on January 26-28, 2017. Participants were not required to answer every question.

April 30,

Results are also shown for identical questions in earlier surveys.
This is not intended to be a scientific poll and its results should not be extrapolated beyond those
who did accept our invitation.

1. At its January/February meeting, the Federal Reserve
will:

0%

Raise interest rates

Lower interest rates

10%

20%

50%

60%

70%

80%

90%

0%

98%

0%

CNBC Fed Survey – January 31, 2017
Page 1 of 36

40%

2%

Keep rates unchanged

Don't know/unsure

30%

100%

FED SURVEY
January 31, 2017
2. After its upcoming meeting, the Federal Reserve's next
directional move will most likely be:

FED SURVEY

Raise interest rates

Lower interest rates

Move to negative interest rates

Launch new quantitative easing

April 30,

100%

100%
94%

90%

88%

95%

98%
92%

90%

100% 100%
95%

Raise interest rates

80%

70%

60%

50%

40%

30%

20%

Launch new quantitative easing

10%
10%

Lower interest rates

10%
4%

5%

3%

2%

5%
0%

0%

0%
Jan 27 Mar 15 Apr 26 Jun 14

Jul 26 Aug 24 Sep 20

CNBC Fed Survey – January 31, 2017
Page 2 of 36

Nov 1

Dec 13 Jan 31

FED SURVEY
January 31, 2017
(For the 100% answering the next move will be to raise rates)

When will FED
the Federal
Reserve take this action?
SURVEY
April 30,
100%

90%

Average:

May 2017

80%

70%

60%

50%

43%
40%

35%

30%

20%

8%

10%

0%

10%
3%

0%
Feb

Mar

Apr

May

Jun

CNBC Fed Survey – January 31, 2017
Page 3 of 36

Jul

0% 0% 0% 0% 0%
Aug

Sep

Oct

Nov

3%

Dec After
Dec
'17

FED SURVEY
January 31, 2017
How many times will the Federal Reserve hike rates in
2017?

FED SURVEY
April 30,

0.00

0.50

1.00

1.50

Survey Dates

Nov 1

Dec 13

Jan 31

CNBC Fed Survey – January 31, 2017
Page 4 of 36

2.00

Average
2.50

3.00

1.97

2.50

2.78

3.50

4.00

4.50

5.00

FED SURVEY
January 31, 2017
3. How will President Trump's economic policies affect:…?
Decrease a lot

Decrease somewhat
FED
SURVEY

0%

April
10% 30,20%

0%

Overall
growth

5%

30%

Have no effect

40%

50%

Increase somewhat

60%

13%

Employment

67%

23%

63%

3%

Deficits

0%
3%
0%
43%

Inflation

0%
0%

55%

8%

80%

13%
0%

Stocks

8%

13%
64%

15%

Bond
yields

0%
0%
0%
25%

CNBC Fed Survey – January 31, 2017
Page 5 of 36

80%

13%
15%

0%

70%

Increase a lot

75%

90%

100%

FED SURVEY
January 31, 2017
4. Please rate President-elect Donald Trump's economic
policies in the following areas:

FED SURVEY
April 30,

Very negative

Somewhat negative

0%

10%

20%

Neutral
30%

40%

Somewhat positive
50%

60%

70%

0%
8%

Indiv. Tax cuts

18%
54%
21%

0%
0%

Bus. tax cuts

8%
45%

48%

55%
28%

Trade

5%
10%
3%

3%
3%

Cutting bus. Regs

0%
36%
59%

CNBC Fed Survey – January 31, 2017
Page 6 of 36

Very positive
80%

90%

100%

FED SURVEY
January 31, 2017
5. President Trump’s relations with China will most likely
lead to?

FED SURVEY
April 30,

0%

20%

More growth for both countries

3%

8%

53%

Less growth for both countries

Little change in growth for either
country

Don't know/unsure

CNBC Fed Survey – January 31, 2017
Page 7 of 36

60%

15%

Growth for US at expense of China

Growth for China at expense of US

40%

15%

8%

80%

100%

FED SURVEY
January 31, 2017
6. President Trump’s relations with Mexico will most likely
lead to?

FED SURVEY
April 30,

0%

20%

Growth for US at expense of
Mexico

Growth for Mexico at expense of
US

More growth for both countries

0%

3%

58%

Little change in growth for either
country

5%

Don't know/unsure

5%

Page 8 of 36

60%

30%

Less growth for both countries

CNBC Fed Survey – January 31, 2017

40%

80%

100%

FED SURVEY
January 31, 2017
7. President Trump has threatened to place a 35 percent
tariff on imports of companies that have moved jobs and
FEDfrom
SURVEY
production
the U.S. to other countries. What effect
April
30, have on overall growth and jobs?
would this
tariff
Dec 13

Jan 31

100%

90%

80%

70%

64%
60%

50%

43%
40%

28%

30%

28%

21%
20%

9%

7%

10%

0%

0%

Decrease a
lot

Decrease
somewhat

Have no
effect

0%
Increase
somewhat

Note: The Dec 13 survey asked only about the effect on overall growth.

CNBC Fed Survey – January 31, 2017
Page 9 of 36

3%

Increase a
lot

FED SURVEY
January 31, 2017
8. If the US imposes tariffs on imports from other countries,
including imports on US companies that move jobs
FED
overseas,
do SURVEY
you expect these other countries to adopt
April
30,
retaliatory
tariffs?
Yes

China

No

Mexico

Don't know/unsure

Canada

Japan

0%

10%

20%

30%

65%
73%

70%

40%

93%
50%

60%

70%

25%

80%

18%

20%

90%

100%

3%
5%

10%

CNBC Fed Survey – January 31, 2017
Page 10 of 36

10%

10%

FED SURVEY
January 31, 2017

9. What is FED
your SURVEY
general view of the border adjustment tax
currently
being
April
30,proposed by House Republicans?
100%

90%

80%

70%

60%

50%

45%

40%

30%

30%

18%

20%

8%

10%

0%

Positive

Neutral

CNBC Fed Survey – January 31, 2017
Page 11 of 36

Negative

Don't know
enough to have
an opinion

FED SURVEY
January 31, 2017
10.
What is your opinion of fiscal stimulus, including tax
cuts and infrastructure spending?

FED SURVEY

100%

April 30,

90%

80%

70%

70%

60%

50%

40%

30%

18%

20%

10%

10%

3%
0%

More effective
than Fed
stimulus

Virtually the
same as Fed
stimulus

CNBC Fed Survey – January 31, 2017
Page 12 of 36

Less effective
than Fed
stimulus

Don't
know/unsure

FED SURVEY
January 31, 2017
11.
Which of the following statements is closest to your
view of fiscal stimulus?

FED SURVEY

100%

April 30,

90%

80%

70%

60%

48%

50%

40%

40%

30%

20%

13%
10%

0%

It's not needed
It's needed because
because the economy
the economy is
is near full
operating below its
employment and it
potential and inflation
risks higher inflation
risks are minimal

CNBC Fed Survey – January 31, 2017
Page 13 of 36

Don't know/unsure

FED SURVEY
January 31, 2017
12.
President Trump has publicly singled out companies
for their plans to move jobs or factories overseas and he
FED involved
SURVEYin decisions made by individual
has become
April
companies
to30,
help keep jobs in the US. What effects will
these presidential actions have on overall US job growth?
100%

90%

80%

70%

60%

50%

50%

40%

28%

30%

18%

20%

10%

5%

0%

CNBC Fed Survey – January 31, 2017
Page 14 of 36

0%

0%

FED SURVEY
January 31, 2017
13.
Mr. Trump will likely make several appointments to
the Federal Reserve Board of Governors. The people he
FEDare
SURVEY
will appoint
likely to support:
April 30,
Dec 13

Jan 31

100%

90%

80%

70%

60%

50%

50%
46%

43%
38%

40%

30%

20%

20%

10%

5%

0%

Faster rate hikes

Slower rate hikes

CNBC Fed Survey – January 31, 2017
Page 15 of 36

Rate hikes at about
the same pace as
other FOMC members

FED SURVEY
January 31, 2017
14.

Will Mr. Trump reappoint Fed Chair Janet Yellen?

FED SURVEY

100%

Dec 13

Jan 31

April 30,

90%

82%
80%

74%
70%

60%

50%

40%

30%

21%
20%

11%
10%

7%

5%

0%

Yes

CNBC Fed Survey – January 31, 2017
Page 16 of 36

No

Don't know

FED SURVEY
January 31, 2017
15.
If Ms. Yellen is not reappointed, who will Mr. Trump
nominate to replace her:

FED SURVEY Dec 13

Jan 31

April 30,

0%

10%

20%

30%

22%
19%

Don't know

14%
17%

Kevin Warsh

3%
8%

Jerome Powell

3%
4%

Larry Lindsey

3%
4%

Non-academic

3%
4%

William Dudley
Friedrich Hayek (1899-1992)
Larry Kudlow

4%
4%
4%

Donald Trump Jr.

3%

Jared Kushner

3%

John Allison

3%

Knut Wicksell (1851-1926)

3%

Richard Fischer

3%

Someone unqualified

3%

CNBC Fed Survey – January 31, 2017
Page 17 of 36

50%

38%
33%

John Taylor

Glen Hubbard

40%

60%

70%

80%

90%

100%

FED SURVEY
January 31, 2017
16.
Recent stock market gains appears to be mostly
driven by:

FED SURVEY Dec 13
April 30,

100%

Jan 31

90%

82%
80%

72%
70%

60%

50%

40%

30%

20%

26%
18%

10%

0%

0%

Solid economic
fundamentals,
including a better
corporate profit
outlook

Expectations for
policy changes from
the new
administration

CNBC Fed Survey – January 31, 2017
Page 18 of 36

3%

Don't know/unsure

FED SURVEY
January 31, 2017
17.
The stock market's expectations for Trump
administration policy changes are:

FED SURVEY Dec 13
April 30,

100%

Jan 31

90%

80%

70%

60%

56% 56%

50%

42%
39%

40%

30%

20%

10%

2%

3%

0%

Too optimistic

Realistic

CNBC Fed Survey – January 31, 2017
Page 19 of 36

Too pessimistic

0%

3%

Don't
know/unsure

FED SURVEY
January 31, 2017
18.
Where do you expect the S&P 500 stock index will
be on … ?

FED SURVEY

April 30,
December 31, 2017

December 31, 2018

2,600

2,500

2480
2453
2,400

2357
2354
2,300

2223
2249
2234 2244

2,200

2275

2255

2242

2200
2158
2,100

2107

2,000

1,900

1,800
Dec Jan 15 Jan 26 Mar Apr 26Jun 14 Jul 26 Aug
15
'16
15
24
Survey Dates

CNBC Fed Survey – January 31, 2017
Page 20 of 36

Sep
20

Nov 1

Dec Jan 31
13
'17

FED SURVEY
January 31, 2017
19.
What do you expect the yield on the 10-year
Treasury note will be on … ?

FED SURVEY
April 30,

December 31, 2017

December 31, 2018

4.0%

3.44% 3.43%

3.5%

3.09%
2.96%

3.0%
2.90%
2.88%

2.5%

2.83%
2.58%

2.54%

2.24% 2.26%

2.28% 2.25%

2.0%

1.5%

1.0%

Dec 15 Jan 26 Mar 15 Apr 26 Jun 14 Jul 26 Aug 24 Sep 20 Nov 1 Dec 13 Jan 31
'16
'17
Survey Dates

CNBC Fed Survey – January 31, 2017
Page 21 of 36

FED SURVEY
January 31, 2017
20.
Where do you expect the fed funds target rate will
be on … ?

FED SURVEY Dec 31, 2018

Dec 31, 2017

Dec 31, 2019

April 30,

3.0%

2.67% 2.70%

2.5%
2.17%

2.22%

2.07%

2.0%

1.87%

1.61% 1.61% 1.62% 1.60%

2.10%

2.15%

1.81%

1.78%
1.69%

1.49%

1.5%
1.43%

1.26%

1.22%
1.18%

1.0%

1.16%

1.32%

1.09%

0.5%

0.0%
Dec Jan 15 Jan 26 Mar Apr 26Jun 14 Jul 26 Aug
15
'16
15
24

CNBC Fed Survey – January 31, 2017
Page 22 of 36

Sep
20

Nov 1

Dec Jan 31
13
'17

FED SURVEY
January 31, 2017
21.
At what fed funds level will the Federal Reserve stop
hiking rates in the current cycle? That is, what will be the
SURVEY
terminalFED
rate?
April 30,
4.0%

3.5%
3.30%
3.20%

3.16%
3.0%

3.17%
3.11%
3.06%
3.04%

2.98%
2.92%

2.5%

2.91%

2.73%

2.85% 2.79%
2.69%
2.65%
2.58%

2.65%
2.64%

2.48%

2.56%
2.42%

2.44%

2.29%

2.0%

Survey Dates

CNBC Fed Survey – January 31, 2017
Page 23 of 36

FED SURVEY
January 31, 2017
22.
When do you believe fed funds will reach its
terminal rate?

FED SURVEY

Survey
Date30,
April

Forecast

August 20 survey

Q4 2017

September 16 survey

Q3 2017

October 28 survey

Q4 2017

December 16 survey

Q1 2018

Jan. 27, 2015 survey

Q1 2018

March 17 survey

Q4 2017

April 28 survey

Q1 2018

June 16 survey

Q1 2018

July 28 survey

Q2 2018

August 25 survey

Q3 2018

September 16 survey

Q1 2018

October 27 survey

Q3 2018

December 15 survey

Q1 2018

Jan. 26, 2016 survey

Q2 2018

Mar 15 survey

Q3 2018

Apr 26 survey

Q4 2018

Jun 14 survey

Q4 2018

Jul 26 survey

Q4 2018

Aug 24 survey

Q4 2018

Sep 20 survey

Q4 2018

Nov 1 survey

Q1 2019

Dec 13 survey

Q2 2019

Jan 31, 2017 survey

Q2 2019

CNBC Fed Survey – January 31, 2017
Page 24 of 36

FED SURVEY
January 31, 2017
23. What is your forecast for the year-over-year percentage
change in real U.S. GDP for …?

FED SURVEY 2017
April 30,

2018

3.0%

24. Since Trump’s election,
by how many percentage
points have you changed
your GDP forecast for …?

2.8%

+2.76% +2.75%

2017 average: +0.24
2018 average: +0.39

2.6%

+2.57%

+2.51%

+2.43%

+2.41%

2.4%
+2.28%
+2.31%

+2.25% +2.26%

2.2%

+2.21%

+2.24%
+2.16%

2.0%

1.8%
2017

Dec 15

Jan 26
'16

Mar 15

Apr 26

Jun 14

Jul 26

Aug 24

Sep 20

Nov 1

Dec 13

Jan 31

+2.43%

+2.31%

+2.41%

+2.21%

+2.25%

+2.26%

+2.24%

+2.28%

+2.16%

+2.57%

+2.51%

+2.76%

+2.75%

2018

CNBC Fed Survey – January 31, 2017
Page 25 of 36

FED SURVEY
January 31, 2017
25.
What is your forecast for the year-over-year
percentage
in the headline U.S. CPI for …?
FEDchange
SURVEY
April 30,
2017
2018
2.8%

2.64%
2.6%
2.57%

2.36%

2.4%

2.38%

2.24%

2.20%
2.2%
2.12%
2.13%

2.12%

2.09%

2.07%

2.0%

2.16%

2.02%

1.8%

1.6%
Dec 15 Jan 26 Mar 15 Apr 26 Jun 14 Jul 26 Aug 24 Sep 20 Nov 1 Dec 13 Jan 31
'16
'17
Survey Dates

CNBC Fed Survey – January 31, 2017
Page 26 of 36

FED SURVEY
January 31, 2017
26.
When do you expect the Fed to allow its balance
sheet to decline?

FED
0% SURVEY5%
April 30,

Feb

Mar

0%

Apr

0%

May

0%

10%

10%

Jul

3%

Aug

3%

Sep

5%
0%

Nov

5%

Dec

10%

Jan '18

Feb

15%

0%

Mar

8%

Apr

0%

May

0%

Jun

5%

Jul

0%

Aug

0%

Sep

5%

Oct

0%

Nov

0%

Dec

3%

Jan '19
Feb '19 or…

8%

5%

Never

CNBC Fed Survey – January 31, 2017
Page 27 of 36

20%

3%

Jun

Oct

15%

13%

FED SURVEY
January 31, 2017
27. What is the single biggest threat facing the U.S.
economic recovery?

20%
15%
8%
4%
8%
5%
7%
10%
3%
12%
6%
31%
40%
0%
6%
3%
3%
6%
0%
0%
0%
0%
5%
0%
0%
2%
3%
0%
3%
5%
0%

31%
28%
30%
27%
29%
32%
21%
23%
26%
29%
26%
18%
14%
13%
14%
11%
17%
21%
16%
8%
10%
10%
21%
22%
28%
20%
19%
16%
27%
9%
5%

20%
20%
22%
22%
24%
29%
30%
26%
21%
12%
29%
15%
14%
9%
0%
8%
3%
9%
2%
5%
5%
5%
3%
2%
5%
7%
3%
11%
8%
2%
3%

0%
3%
0%
2%
3%
2%
2%
3%
3%
6%
6%
3%
3%
0%
3%
3%
0%
0%
0%
3%
0%
0%
0%
2%
3%
2%
3%
3%
0%
7%
3%

2%
3%
2%
0%
3%
0%
0%
5%
5%
3%
3%
3%
6%
0%
6%
0%
0%
0%
4%
8%
0%
3%
0%
2%
0%
2%
0%
0%
3%
0%
0%

2%
0%
2%
4%
3%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%

0%

CNBC Fed Survey – January 31, 2017
Page 28 of 36

10%
18%
8%
15%
12%
5%
8%
12%
6%
10%
3%
6%
6%
6%
14%
12%
0%
8%
8%
0%
5%
0%
3%
2%
3%
0%
8%
7%
3%

18%
12%
11%
8%
14%
16%
8%
11%
25%
6%
8%
13%
10%
5%
5%
7%
0%
10%
3%
3%
3%
7%
10%

41%
28%
28%
22%
29%
45%
41%
44%
44%
33%
36%
28%
22%
31%
30%
32%
19%
15%

6%
17%
8%
6%
9%
8%
10%
5%
8%
5%
9%
8%
7%
3%
8%
3%
0%
0%

3%
0%
0%
0%
0%
0%
3%
5%
0%
2%
0%

3%
7%
5%
7%
6%
5%
0%
7%
0%

13%
7%
14%
8%
5%
28%
51%

10%

11%
13%
14%
7%
13%
2%
21%
18%
13%
12%
11%
8%
3%
16%
14%
19%
11%
9%
14%
5%
15%
23%
21%
11%
10%
7%
11%
11%
8%
5%
0%

Don't know/
unsure

Other

Trump's temperament

Protectionist trade
policies

Outcome of US
presidential election

Immigration policy

Terrorist attacks in the
U.S.

Slow wage growth

Global econ weakness

Geopolitical risks

Rise in interest rates

Deficits

Debt ceiling

Deflation

Inflation

Slow job growth

April 30,
Tax/
regulatory policies

Survey
Date
Apr 30
Jun 18
Jul 30
Sep 17
Oct 29
Dec 17
Jan 28 '14
Mar 18
Apr 28
Jul 29
Sep 16
Oct 28
Dec 16
Jan 27 '15
Mar 17
April 28
Jun 16
Jul 28
Sept 16
Oct 27
Dec 15
Jan 26 '16
Mar 15
Apr 26
Jun 14
Jul 26
Aug 24
Sep 20
Nov 1
Dec 13
Jan 31 '17

European recession/
financial crisis

FED SURVEY

0%
0%
4%
2%
0%
2%
0%
0%
0%
3%
3%
3%
0%
0%
0%
3%
0%
0%
2%
0%
0%
3%
0%
2%
0%
2%
0%
0%
0%
2%
0%

FED SURVEY
January 31, 2017
28.
In the next 12 months, what percent probability do
you place on the U.S. entering recession? (0%=No
FED
SURVEY
chance of
recession,
100%=Certainty of recession)
April 30,
40%

36.1%
35%
34.0%

30%

28.8%

28.5%

26.0%
25.9%

25.3%

25.5%

25%

24.4%
23.5%
22.9%

24.1%

22.1%

20%

20.6%

20.3%

20.4%
18.2%

17.6%

15%

16.9%

17.3%
16.9%
16.2%

18.6%
16.4%

17.4%

18.1%

15.1%

16.2%

15.2%

22.2%
21.6%
21.1%

18.5%

18.4%

19.1%

23.2%

15.1%

15.3%

15.0%
14.6%
13.6%

14.7%

10%

Aug 11,…
Sep 19
Oct 31
Jan 23,…
Mar 16
Apr 24
Jul 31
Sep 12
Dec 11
Jan 29,…
Mar 19
Apr 30
Jun 18
Jul 30
Sep 6
Oct 29
Dec 17
Jan 28 '14
Mar 18
Apr 28
Jul 29
Sep 16
Oct 28
Dec 16
Jan 27 '15
Mar 17
April 28
Jun 16
Jul 28
Sept 16
Oct 27
Dec 15
Jan 15 '16
Jan 26
Mar 15
Apr 26
Jun 14
Jul 26
Aug 24
Sep 20
Nov 1
Dec 13
Jan 31 '17

13.0%

CNBC Fed Survey – January 31, 2017
Page 29 of 36

FED SURVEY
January 31, 2017
29.

What is your primary area of interest?

FED SURVEY
April 30,
Other
21%

Currencies
0%
Fixed Income
15%

Economics
49%

Equities
15%

Comments:
Jim Bianco, Bianco Research, President: The expectations are
for a Trump inspired reflation of the economy. That can come in one
of two forms, real growth or inflation. Currently it looks like it will be
more parts inflation than real growth.
Peter Boockvar, The Lindsey Group, Chief Market Analyst: The
Fed better start focusing more on the signals the markets are
sending as they are woefully behind the 8 ball.

CNBC Fed Survey – January 31, 2017
Page 30 of 36

FED SURVEY
January 31, 2017
Lou Brien, DRW Trading Group, Analyst: I think trading relations
is going to be the key dynamic for the economy this year. If there is
FED
SURVEY
a trade kerfuffle
during
the next year it will hit GDP. This is mainly
30,
because thereApril
is a distance
to travel between point A, the current
trading relationships, and point B, revitalizing domestic production
facilities in the US as a means to reduce the trade gap. A disruption
in trade while the economy moves between A and B will be
problematic. This will be the tricky bit for the economy in 2017, as I
see it.
Robert Brusca, Fact and Opinion Economics, Chief Economist:
Trump protectionism is a danger but it also an investment in the
future that no other administration has been willing to make. The
currency system is completely broken down. We have a managed FX
'system' - not true floating rates. The US has not run a current
account surplus since 1991. All the 'beauty' of a flexible rate system
has been coopted, made ugly and turned against the US. Since
'international financial reform' is an odd rallying cry and since no one
lines up behind it, using trade and commercial policy as a 2x4 to
whack the competition over the head for this continued manipulation
and abuse of the current system MAKES SENSE. We do not have free
trade. We have not had the benefits of free trade and we have less
to lose from this Trump gambit than most people think. I suspect
Trump wants leverage more than tariffs.
John Canally, LPL Financial, Chief Economic Strategist: Watch
the deficit.
John Donaldson, Haverford Trust Co.: It will be very difficult for
the FOMC to gauge the impact of any rate increases with the
possibility of simultaneous protectionist trade policies and large
deficit spending. Cannot see them moving before mid-year.

CNBC Fed Survey – January 31, 2017
Page 31 of 36

FED SURVEY
January 31, 2017
Neil Dutta, Renaissance Macro Research, Head of Economic
Research: While many forecasters are boosting expectations based
FED SURVEY
on a Trump tailwind,
the nasty secret, in our view, is that the
30,
momentum inApril
the economy
was strong to begin with. Inventories
have room to build and looser financial conditions over the last year
should lift business investment in coming quarters.
Robert Fry, Robert Fry Economics, Chief Economist: President
Trump is too focused on Mexico relative to China (biggest abuser of
global trade system) and Germany (biggest currency manipulator).
Trashing the Mexican economy with tariffs and other bad policies is
like throwing rocks through your neighbors' windows, thereby
reducing the value of YOUR home.
Kevin Giddis, Raymond James Financial, Head of Fixed
Income Capital Markets: We have entered a phase that I call
"Reactive Opportunity." The President is very hard to handicap and I
don't really know how much he can get done when Congress must be
dealt with to make the kind of sweeping changes he proposes. While
the trend for interest rates is up, I wouldn't be surprised if
something happens or doesn't happen that could "turn the cart" on
its head. Fun times!
Stuart Hoffman, PNC Financial, Chief Economist: Fiscal stimulus
and only gradual FOMC rate hikes (from a low level) in 2017-2018 is
a classic recipe for faster inflation and higher interest rates and
federal deficits.
Art Hogan, Wunderlich Securities, Chief Market Strategist:
Investors can get behind pro-growth policies and can't and won't
support protectionist policies. Trade wars, like all wars, end
negatively for all.

CNBC Fed Survey – January 31, 2017
Page 32 of 36

FED SURVEY
January 31, 2017
John Kattar, Al Maamur Capital, Chief Investment Officer: Two
separate, non-consensus thoughts: (1) The Border Adjustment Tax
is an excellentFED
idea SURVEY
that will result in more growth and jobs saved
April 30,
than even lowering
corporate tax rates. (2) Yellen is doing a better
job than her much heralded predecessors. I hope she is
reappointed.
Jack Kleinhenz, National Retail Federation, Chief Economist:
While the outlook for 2017 is most promising and the consumer, as
the key driver, will be supported by wage gains and continued job
growth, uncertainty about the scale and scope of fiscal policy
changes remain the critical risk to the U.S. outlook.
David Kotok, Cumberland Advisors, Chairman and Chief
Investment Officer: Trump policy outcomes are still lacking in
clarity. He is inconsistent. And he is eroding his support with
nonsense. Forecasting Trump policy is like sculpting fog.
Subodh Kumar, Subodh Kumar & Associates, President: We
see currencies and precious metals as reverting to being harbingers
of stress. Political caveat emptor is required as rhetoric appears on
abrogating agreements and even treaties. Yet the era ended over a
half century ago of banana republics, of foreign gunboats and
arbitrary colonial administrators. We see fixed income as having the
greater risks but favor short to medium term securities, especially in
U.S. dollars. In equities, we see Financials as crucial. In growth, we
favor Info Tech over Healthcare. In cyclicals, we favor Industrials
over Consumer segments. On restructuring, we favor Materials and
Energy. We overweight the U.S. for diversified delivery and Asia for
growth .
Guy LeBas, Janney Montgomery Scott, Chief Fixed Income
Strategist: Policy may be in a chaotic state, but the long term
fundamentals of slow population growth and questionable
productivity growth will carry the day and drive interest rates.
CNBC Fed Survey – January 31, 2017
Page 33 of 36

FED SURVEY
January 31, 2017
Donald Luskin, Trend Macrolytics, Chief Investment Officer: In
your questions about fiscal policy, the only reason I said I thought
FEDidea
SURVEY
they were a good
is that I think we need tax cuts. Government
April 30,
spending is useless
or worse.
Larry McMillan, McMillan Analysis, Founder: Just remember to
take what Trump says seriously, but not literally.
Rob Morgan, Sethi Financial Group, Chief Investment Officer:
In December, Fed Governor Lacker said we may need more than 3
hikes in 2017. I agree with him and think we'll see a hike every
quarter.
Joel Naroff, Naroff Economic Advisors, President: The markets
are way too optimistic about the Trump policies and in order not to
disappoint, Congress would have to pass policies that would cause
inflation and interest rates to balloon, risking a recession. If they
disappoint, the markets would correct. Either way, there could be
real problems ahead.
James Paulsen, Wells Capital Management, Chief Investment
Strategist: With the 10-year embedded CPI inflation expectation in
10-year TIP bonds rising today to 2.08% and with wage inflation
threatening to soon breach 3 percent, investors and the Fed may be
forced to focus more on inflation. Indeed, I believe a potential wild
card for 2017 is not only how many times will the Fed raise the
target funds rate but the possibility that they may opt for a 50 basis
point single move. The financial markets could be surprised this
year not only by the number of Fed hikes rates but also by the size
of at least one hike.

CNBC Fed Survey – January 31, 2017
Page 34 of 36

FED SURVEY
January 31, 2017
Lynn Reaser, Point Loma Nazarene University, Chief
Economist: The pursuit of a protectionist trade route could open a
FED SURVEY
whole new Pandora's
Box of economic and market risk. Depending
April
30, jeopardize other positive and pro-growth
on its intensity,
it could
policies.
John Roberts, Hilliard Lyons, Director of Research: I wanted to
put two risks on the list of risks for the economy: protectionist trade
policies and Trump's temperament, as they are linked as shown with
today's Mexican situation. President Trump's actions on the
trade/international front certainly open the window to a sharp
potential deterioration of relations between the US and its trading
partners. I hope that some of his advisors limit his blunt talk so as
to not hurt our relations in this regard. Our belief for a first half gain
in the equity markets followed by a second half correction is
predicated on investors being disappointed by the pace of the
introduction of the new administrations' policies, which we expect to
be much slower than anticipated combined with deteriorating
international relations.
John Ryding, RDQ Economics: On the second day of the March
FOMC meeting, the BLS will likely publish a 2.5% CPI inflation rate.
If the Fed does not hike rates that day, the market will not buy into
the SEP path of 3 hikes per year for 17 and 18.
Allen Sinai, Decision Economics, Chief Global Economist and
Strategist: The Trumpian world is hugely different than the preTrump world.
Diane Swonk, DS Economics, CEO and Founder: We could be
entering into the most fundamental shift in inflation and interest
rates in nearly forty years, with little knowledge about how markets
will react to cumulative changes.

CNBC Fed Survey – January 31, 2017
Page 35 of 36

FED SURVEY
January 31, 2017
Scott Wren, Wells Fargo Investment Institute, Senior Global
Equity Strategist: The stock market has done an admirable job of
SURVEY
not pricing in FED
too much
from a Trump administration in the near
30,
term. The S&PApril
500 is
trading at what we consider "fair value" based
on the trajectory of the economy and the fundamentals in place well
before the election. Stock valuations are not stretched. If and when
the new administration's pro-growth policies are implemented (and if
the magnitude is great enough) they will in all likelihood not show up
in the economic statistics until the 2018, 2019, 2020 time frame.
This is not a 2017 story.
Mark Zandi, Moody's Analytics, Chief Economist: The economic
outlook critically depends on what policies the Trump Administration
and Congress pursue. If they focus on corporate tax reform and
targeted regulatory relief the economy's prospects will brighten. But
if they instead focus on restricting trade and immigration the outlook
will quickly turn darker.

CNBC Fed Survey – January 31, 2017
Page 36 of 36